What is a living wage?

How can a global company ensure it pays its employees decent and sufficient wages? It’s more complicated than you might think, but Yara is taking action.

Working poverty

Working poverty is a reality for millions of people worldwide. For many, holding a job does not mean a way out of poverty for themselves or their families.

Yara, like other companies, pays employees according to the labor market in the countries in which it operates. In countries with strong labor rights, this is likely to mean that Yara pays employees a living wage, as wages more accurately reflect the cost of living. In other markets, labor rights are virtually non-existent, and the risk of under-paying workers increases.

Yara employees in sfaety gear at plant

Paying a living wage is key for Yara to meet its goals of providing decent work and reducing inequality. The challenge is that there is no universally agreed definition of what constitutes a living wage.

However, this is not an excuse for inaction. Yara’s Living Wage project aims to develop standards for the markets it operates in and analyze whether Yara needs to make changes to its compensation policy in order to pay its employees a living wage in all 60 countries of operation.

What to include?

Yara is running a pilot study in 11 key markets. Through this, a Yara definition of what constitutes a living wage will be developed as a key first step to assess whether or not Yara meets those benchmarks. This is not as straightforward as one might think.

For example, ask yourself what a living wage is in your country – not just the minimum wage, but an actual living wage that enables people to participate fully in society. Should Yara’s wages reflect the size of average households in the country? Should it be taken into account whether the average family has one or two wage earners? Should it allow room for culture and other leisure activities? What about money for tobacco and alcohol? Can we have a global definition of what a living wage is, or does it have to be adapted to each region, country or indeed municipality?

“Living Wage is an important part of Yara’s People ambition related to diversity, equity, and inclusion – to ensure that all our employees, no matter where they live and work, will have the opportunity to participate fully in society. We actively seek to find good definitions of what this means and to make necessary adjustments to our compensation policies if we find countries and markets with wages below what will be defined as a living wage.”

Solveig Hellebust, EVP People Process & Digitalization.

Together with consulting company Mercer, Yara is currently in the process of testing a suggested living wage definition in the pilot countries. Once that is agreed, we will assess whether Yara meets that definition in the markets or not. If Yara does not meet the living wage standards agreed, work will be undertaken to ensure compliance.

Over the next three years, Yara aims to include more countries in the project, and to also include contractors within the scope. The living wage definition will be implemented in Yara’s global compensation policy as a minimum standard.

Yara’s new ambition of Growing a Nature-Positive Food Future has people and prosperity as key elements. Ensuring that we meet our commitments to our own employees is a key first step.